New Primer on the Structure of Social Security Benefits

Allison Edwards

The Social Security Trustees report brought attention to the troubled state of the program’s finances, but the mechanics of its benefits are not widely understood. In a new primer, AAF’s Director of Fiscal Policy Gordon Gray explains the structure of the program and how benefits are calculated.

An excerpt:

Social Security is an important anti-poverty program for retirees and other vulnerable populations. The program presently faces structural deficits that endanger the program’s financial wherewithal. Most Americans do not typically grapple with these issues, however, and are understandably concerned with how their lifetime of paying payroll taxes will translate into income security in retirement. Social Security is designed to provide a progressive income replacement regime for eligible recipients based on work and earnings history, but changing demographics will require reforms to the program to ensure these benefits are available for future retirees.